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Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments Assembly Finishing $74,000 Direct overhead $41,000 Square footage 5,600 5,600 Number of receiving orders 1,700 1,500 Direct labor hours. 28,000 The company has decided Osimplify its method of allocating support service costs by switching to the direct method. General Factory Receiving $480,000 $190,000 360 2,800 Assembly Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values subsequent calculations. Allocation ratios: 42,000 Finishing

Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments Assembly Finishing $74,000 Direct overhead $41,000 Square footage 5,600 5,600 Number of receiving orders 1,700 1,500 Direct labor hours. 28,000 The company has decided Osimplify its method of allocating support service costs by switching to the direct method. General Factory Receiving $480,000 $190,000 360 2,800 Assembly Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values subsequent calculations. Allocation ratios: 42,000 Finishing

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Direct Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments Assembly Finishing $41,000 5,600 1,700 28,000 42,000 The company has decided to simplify its method of allocating support service costs by switching to the direct method. Direct overhead Square footage Number of receiving orders Direct labor hours Allocation ratios: Square footage Number of receiving orders Allocations: Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. General Factory Receiving Direct costs General Factory Receiving $480,000 $190,000 Total 360 Assembly 2,800 Assembly Finishing $74,000 5,600 1,500 Finishing 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Transcribed Image Text:Direct Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments Assembly Finishing $41,000 5,600 1,700 28,000 42,000 The company has decided to simplify its method of allocating support service costs by switching to the direct method. Direct overhead Square footage Number of receiving orders Direct labor hours Allocation ratios: Square footage Number of receiving orders Allocations: Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. General Factory Receiving Direct costs General Factory Receiving $480,000 $190,000 Total 360 Assembly 2,800 Assembly Finishing $74,000 5,600 1,500 Finishing 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. Allocation ratios: Square footage Number of receiving orders Allocations: General Factory Receiving Direct costs Total Assembly Assembly Finishing Assembly Finishing Finishing $ 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.) Overhead Rate per direct labor hour per direct labor hour
Transcribed Image Text:Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. Allocation ratios: Square footage Number of receiving orders Allocations: General Factory Receiving Direct costs Total Assembly Assembly Finishing Assembly Finishing Finishing $ 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.) Overhead Rate per direct labor hour per direct labor hour
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